INR

• The Indian Rupee trades calmly at open against the US Dollar; however, the outlook has become uncertain.
• The exchange of attacks between the US and Iran has renewed Middle East tensions.
• Investors await the US-India CPI data for May.

The Indian Rupee (INR) opens almost flat against the US Dollar (USD) on Wednesday. The USD/INR pair consolidates around 95.42; however, the outlook of the pair has turned bullish as Middle East tensions have flared up again, following the United States (US) retaliation against Iran over the shooting down of an American helicopter.

Renewed US-Iran tensions have offered support to oil prices. As of writing, the MCX Crude Oil contract expiring on June 18 is up 0.8% to near 8,490. Oil prices also clawed back half of their early losses on Tuesday after sliding to 8,212.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.

US strikes after Trump vows retaliation over the shooting down of an Apache helicopter over Hormuz

On late Tuesday, the US Central Command (CENTCOM) announced that it launched a series of attacks on Iran’s air defense, ground control stations, and surveillance radar sites near the Strait of Hormuz, a vital passage to almost 20% of global energy supply. The US was expected to conduct military operations against Iran as President Donald Trump vowed retaliation for shooting down a US Apache helicopter over Hormuz.

In response, Iran has launched missiles on various US airbases in Jordan, Kuwait, and Bahrain, and has warned Washington to leave the Gulf region for their own safety.

“Powerful armed forces will not ignore any attack or threat,” Iran’s Foreign Minister Abbas Araghchi said, adding, “Get out of our region if you want to be safe.”

FIIs remain net sellers on all trading days so far in June

Overseas investors continue to dump their stake in the Indian stock market, as Middle East tensions continue to hurt their sentiment towards risky assets. So far in June, Foreign Institutional Investors (FIIs) have remained net sellers in all trading days of June and have offloaded their stake worth Rs. 60,529.36 crore.

US-India CPI data under spotlight

Later in the day, investors will pay close attention to the US Consumer Price Index (CPI) data for May, which will be published at 12:30 GMT. The US Bureau of Labor Statistics (BLS) is expected to show that the headline CPI grew at an annualized pace of 4.2%, faster than 3.8% in April. In the same period, the core CPI – which excludes volatile food and energy items – is expected to have risen at a faster pace of 2.9% against the previous reading of 2.8%.

Signs of price pressures accelerating further would prompt expectations of the Federal Reserve’s (Fed) interest rate hikes for the year. As of now, the CME FedWatch tool shows that the odds of the Fed delivering at least one interest rate hike this year are almost 72%.

Meanwhile, India’s CPI data on Friday is expected to arrive higher at 4% YoY from 3.48% in April.

Technical Analysis: USD/INR trades in a Symmetrical Triangle formation

USD/INR trades almost flat at around 95.43 at press time. The Symmetrical Triangle formation and pair’s stickiness to the 20-period Exponential Moving Average (EMA) at 95.46, reflects that the immediate trend has turned sideways.

The Relative Strength Index (RSI) wobbles inside the 40.00-60.00 zone, suggesting indecisiveness among investors.

On the topside, immediate resistance is located near the downward-sloping border of the above-mentioned chart pattern at around 96.00. A decisive break above 96.00 would open the door for further upside towards the all-time high at 97.10. On the downside, initial support is seen at the upward support trend-line break level near 95.04, ahead of the structural trend-line origin around 94.49; a sustained drop below these marks would open the way for a deeper corrective phase, while holding above them would keep the broader constructive pattern intact.

• The Indian Rupee opens flat at around 95.72 against the US Dollar with investors await the RBI’s monetary policy.
• US President Trump said that Iran has agreed to give up its nuclear ambitions.
• Indian government approves scrapping capital gains tax on foreign investment in government bonds.

The Indian Rupee (INR) opens flat against the US Dollar (USD) on Thursday after a strong Wednesday. The USD/INR pair holds onto previous day’s gains around 95.72 as oil prices remain higher, with United States (US)-Iran negotiations remaining in deadlock.

In the opening trade, MCX Crude Oil price opens 1.2% lower to near 9,120, but is close to its 10-day high of 9,290 posted on Wednesday.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.

US President Trump remains confident of early deal with Iran

US President Donald Trump said in The New York Post’s “Pod Force One” program on Wednesday that Iran has agreed over not having nuclear weapons, adding, “Iran’s Ayatollah [referring Supreme Leader Mojtaba Khamenei] is involved in negotiations with Washington” and he will meet him at some time. However, Trump warned that Iran could change its mind and can pursue its nuclear ambitions.

When asked about the timeframe in which the US and Iran could reach a deal, Trump said a memorandum of understanding (MoU) between the nations could reopen the Strait of Hormuz as early as this week; however, there is a possibility that the US blockade on Iranian sea ports could last till Labor Day, September 7.

India approves scrapping capital gains tax on foreign investment in government bonds

Earlier in the day, the Cabinet meeting has approved the scrapping of capital gains tax on foreign portfolio investment in government bonds, aiming to improve the condition of foreign flows in the Indian economy.

The move was highly anticipated by the Indian government as significant Foreign Institutional Investors (FIIs) selling in the Indian stock market has been one of key reasons behind Indian Rupee’s sharp depreciation.

On Monday, FIIs also remained net sellers in the Indian equity markets, offloading their stake worth Rs. 5,616.56 crore. So far in June, overseas investors have remains net sellers in all three trading days.

RBI’s policy comes into limelight

Going forward, the major trigger for the Indian Rupee will be the Reserve Bank of India’s (RBI) monetary policy, which will be announced on Friday. The RBI is expected to hold the Repo Rate steady at 5.25% and guide a hawkish monetary policy outlook, as higher energy prices have de-anchored inflation expectations.

In the US, investors will pay close attention to the Nonfarm Payrolls (NFP) data for May, which will be released on Friday. The impact of the US NFP data will be significant on the Federal Reserve’s (Fed) monetary policy outlook.

Technical Analysis: USD/INR holds above 20-day EMA

USD/INR trades aLmost flat at around 95.72 in the opening trade. The pair maintain a modest bullish bias as it stays above the 20-day Exponential Moving Average (EMA) at 95.47. The price action consolidates near recent highs while the Relative Strength Index (RSI) at about 54.8 sits slightly above the neutral territory, suggesting steady but not overextended upward momentum.

On the downside, immediate support is aligned with the 20-day EMA around 95.47, which reinforces the underlying demand zone and would need to give way to signal a deeper corrective phase towards the June 2 low at 95.00, followed by the May 7 low at around 94.00. Looking up, the pair could reclaim the all-time high of 97.09 if it manages to rise above the May 28 high at 96.65.

• The Indian Rupee rises at open against the US Dollar at the start of the RBI policy and the US NFP week.
• Oil prices rebound due to the exchange of attacks between Israel and Lebanon.
• The RBI is expected to leave interest rates unchanged on Friday.

The Indian Rupee (INR) opens on a positive note against the US Dollar (USD) at the start of the Reserve Bank of India (RBI) policy week. The USD/INR pair slides to near 94.78 as the Indian currency strengthens further amid solid hopes over the United States (US)-Iran permanent peace deal, even as oil prices have bounced back.

At press time, the WTI Oil price trades 2% higher to near $89.00 after registering over-a-month low at $85.41 on Friday. Theoretically, currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform when oil prices recover.

Oil prices have regained ground, following attacks from Israeli Defense Forces (IDF) in Lebanon on Iran-backed Hezbollah, which renewed fears of an energy supply crisis.

US President Trump revises terms for Iran deal

The comments from US and Iranian officials clearly state that negotiations toward a permanent peace deal are ongoing, and Washington doesn’t want Tehran to have nuclear weapons in any way.

US President Donald Trump said in an interview with Fox News over the weekend that Washington wants to make sure Iran neither develops nuclear weapons nor purchases them before reaching a deal, adding that he has inculcated tougher terms for Iran relating to nukes and the Strait of Hormuz. “So now [the agreement] says, ‘We will not develop or in any way purchase a military weapon,” Trump said.

After US President Trump’s interview, Iran’s Foreign Minister Abbas Araghchi said that negotiations with Washington were ongoing, and any deal could not be judged before a definitive outcome is reached, Reuters reported.

RBI policy and India’s Q1 GDP data awaited

This week, key triggers for the Indian currency will be the RBI’s monetary policy announcement and the Q1 GDP data, which will be released on Friday. According to the latest Reuters poll, the RBI will hold its key Repo Rate unchanged at 5.25% and deliver a hawkish stance on the monetary policy outlook, as high oil prices due to the energy supply crisis have prompted inflationary pressures globally.

The poll also showed that a majority of economists anticipated at least one interest rate hike by the year-end.

Over the weekend, India’s Finance Ministry warned that a depreciating Indian Rupee, higher energy prices, and below-average expected monsoon pose a threat to nation’s inflation outlook.

US NFP will be key trigger for US Dollar

The US Dollar starts the week with a mild bullish tone, with investors awaiting key US labor market and economic activity data releases, especially the Nonfarm Payroll (NFP) data, which will be released on Friday.

The impact of the US NFP data is expected to be limited on the Federal Reserve’s (Fed) monetary policy outlook, unless there is a dramatic change, as the latest comments from policymakers have shown that they are more concerned about high inflation than weak job demand.

Technical Analysis: USD/INR settles below 20-day EMA

USD/INR trades lower at around 94.78, holding below the 20-day exponential moving average (EMA) at 95.3677 and keeping a mild bearish near-term bias.

The pair has slipped away from recent highs, and with price capped beneath this short-term EMA, rallies appear vulnerable to selling while the Relative Strength Index (RSI) at 45.7 drifts below the neutral 50 line, hinting at waning upside momentum rather than outright oversold conditions.

On the topside, initial resistance is defined by the 20-day EMA at 95.37, and a sustained break above this barrier would be needed to ease immediate downside pressure and open the way toward 96.00. Looking down, the pair could extend its decline towards May 7 low at around 94.00